Cummings CMI and my energy play

My 2 cents on Cummins CMI (a while ago)
I have watched CMI for a few months now, have not pulled the trigger yet. There was a brief chance around March 17. I dare not to buy it after it went above 50. Like commodity, short term CMI has some selling pressure because:

1) It’s an infrustructure/transportation play, with US/global economy slow down, its business should also slow;
2) At Micro level, I know Dodge Ram trucks use CMI diesel engine. Chrysler just announced the Ram production cut, so…

But I still like it because their diesel engines are very very good. I know very few manufacturers can make their quality diesel engines. A related thing, is the bio-diesel, if this becomes a reality, diesel engine will be more popular.

Today CMI got a huge lift after reported strong earning (seekingalpha: cummins engine chugs along nicely).

My energy plays
Oil, natural gas and oil services. I have Marathon Oil (intergrated oil), Chepeseake Energy (NG), Devon Ennergy (NG). And yesterday I added Smith International (oil service).

401k, oil and gas

401k
Last week my old 401k at Vanguard was merged to my new 401k. I don’t know if you paid attention to your 401k or IRA lately, not a fun thing to do. I did a quick calculation, my old 401k portfolio lost 7.56% of its value from Dec 31 2007 to July 7 2008 when it was transferred into new account. It appears I did ok considering the market dropped quite a bit in 1st half of the year.

Oil and gas
The relief at gas pump is coming. Not from federal goverment. The crude oil price has been dropping 3 days in a row in the futures market (refer to Bloomberg energy price here). Natural gas also goes lower with the oil pullback. Notice I used the word pullback. I don’t think we are going to see $50 oil or $2 a gallon gas. So, I was buying oil and natural gas stocks 3 days in a row. I bought Marathon Oil (NYSE:MRO) on Tuesday, Devon Energy (NYSE:DVN) yesterday, and Chesapeake Energy (NYSE:CHK) today, all in small amounts. Because I know the oil and gas could drop more, so as the stocks. But long term, 6 months or a year from now, I am quite bullish on them.